Can I Get a Loan Without a Bank Account?

You may qualify for personal loans with no bank account — and a bad credit score — although some of the loan offers may have higher interest rates and fees. Ultimately, you’ll have to jump through more hoops to get a loan without a bank account. For example, you may need to put up some collateral. In this guide, we explain your options for getting loans without a bank account, how to take advantage of them, and what the process is for getting a loan in this situation.

Do I need a bank account to take out a loan?

You do not need a bank account to take out a loan, but you may have an easier time getting a loan — as well as better terms — with a bank account than without one. Lenders favor borrowers with an active bank account because the account can function as a form of collateral, plus it offers lenders a glimpse of your banking history and possible proof of income.^[1], ^[2]

If you don’t have a bank account, you may have to resort to subprime loans. These loan products typically have higher interest rates and overall terms, such as higher origination fees, and shorter repayment terms. You might want to avoid predatory subprime loans, such as payday, pawnshop, and title loans, if you need a loan without a bank account.^[2]

Types of loans I can get without needing a bank account

If you’ve made a loan request and the provider told you that you need a bank account for eligibility, you have some different loan options to consider. We break them down into seven categories in the following sections.

1. Family and friends

The first place many people turn to when they need to borrow money but don’t have a bank account is their family and friends. It makes sense to seek to borrow from those who you already have a relationship with, but there are obvious risks to this as well.

Pros

• Credit score isn’t an issue: Family and friends generally won’t be hung up on your credit score (or even know what it is).
• Flexible repayment: Family and friends aren’t rigid like banks, so you can come up with some creative repayment plans based on their comfort level.
• Typically lower interest rates: Family and friends usually don’t charge interest on loans, because their reason for lending to you isn’t to make money, but if they do charge interest, you typically pay much less than you would on a traditional loan.
• Beneficial for both parties: If they do decide to charge an interest rate, it can become a win-win: The borrower gets the loan they need and the family member or friend gets their money back with a little interest gained.^[3]

Cons

• Potential relationship tension: Money often comes between friends and family members, so if you don’t pay back the loan or pay it back too slowly, your relationship could become strained.
• Credit history won’t improve: This type of loan is not reported to the credit bureaus, so you won’t get any boost to your credit by paying it back by the due date.
• Tax rules: If your friends or family members lend enough money to report it on their taxes, the IRS may assume that they charged you interest, leading to tax consequences to discuss with a tax professional.^[3]

2. Pawnshop loans

Pawnshop loans offer straightforward, secured loans: You put up an item of value as collateral, the pawnshop appraises it, and they offer you a loan in the amount that they believe the item is worth. If you don’t pay it back, the pawnshop keeps the item and sells it.^[4]

Pros

• No credit check: Since you put an item up for collateral, the lender is not worried about you being able to repay.
• Receive money quickly: Because this process doesn’t involve going through your credit history, you undergo a fast process that gets you cash instantly.
• Unpaid loans don’t go to collections: The pawnshop won’t need to hound you for the money. They just keep the item you put up as collateral.
• Your credit is not affected: A pawnshop loan takes place outside the normal credit application process, so even if you are unable to pay it back, nothing negative goes on your credit history.^[4]

Cons

• Must provide an item of value for collateral: You must have an item of value to put up as collateral. If it’s something you don’t want to lose, like a family heirloom, this could be risky.
• Lower loan amount: Pawnshops typically price whatever item you put up for collateral far below its actual market value to lower their own risk and allow themselves to pull a profit. The average pawnshop loan is $150.
• Must keep the pawnshop ticket safe: If you lose the pawn ticket that the pawnshop gave you when you took out the loan, then you might not be able to collect your collateral once you’ve paid off the loan.^[5]
• High fees: Pawnshop loans include high interest rates and fees, so it can be a costly way to get short-term cash.
• Doesn’t help you build credit: Pawnshops won’t report to credit bureaus. While not paying back the loan won’t hurt you credit-wise, paying it back on time won’t help your credit score, either.^[4]

3. Title loans

An auto title loan works somewhat similar to pawnshop loans in that you’re putting up something for collateral, but instead of a piece of jewelry or electronics, you’re offering the title to your car.^[6]

Pros

• Must own a vehicle: If you own your vehicle outright, your car is all you need to get the loan.
• Easy and fast approval process: Since they just need your car title, and no credit check or bank statement, approval for your loan is quick.
• You can keep your vehicle as you pay off the loan: Unlike a pawnshop, you can keep your car while you pay the car title loan off.^[6]

Cons

• Risky loan option: As with any form of collateral-based loan, you risk losing the underlying asset.
• Your vehicle could be repossessed: If you rely on your car to get to work, not paying off the loan could be disastrous if you default and then lose your car.
• High interest rates: Interest rates for title loans are often high, as are the fees, so it can be expensive.
• Short repayment terms: Title loan companies want you to pay the loan back fast — significantly fast — perhaps becoming too much of a debt burden for you.^[6]

4. Cash advances

Without a bank account and credit history, you may not have a credit card. If you do, however, you can usually get a cash advance loan. You can find your cash advance terms spelled out in your cardholder agreement.^[7]

Pros

• No collateral required: A cash advance is an unsecured loan, so you don’t need any collateral.
• Easy to get cash fast: Since you are already approved for the credit, you don’t have to wait on a credit check and approval process. So you can get cash quickly.^[7]

Cons

• High fees: Cash advances typically have hefty fees and high APRs (annual percentage rates) associated with them. Check the cardholder agreement to see what yours are so you can assess whether this option works for your personal finances.
• Interest begins accruing immediately: As soon as you take out the cash, interest starts accruing right away. You could face a much larger amount of debt than you anticipated if you don’t pay it back as soon as possible.^[7]

5. Lending circles

Lending circles have been around for centuries. These groups require each member to contribute the same specific amount each month, and then each member takes a turn, at specific intervals, receiving the entire pot.^[8]

Pros

• Borrow money at low or no interest: Typically, lending circles don’t charge interest.
• Quick approval: You may create a lending circle with people you trust. So you don’t go through a formal application or approval process unless you use an online provider.
• May report payments to the three major credit bureaus: Sometimes, a lending circle reports payments to the credit bureaus, and if you make all of your required on-time payments, you may elevate your credit score.^[8]

Cons

• May require fees: Lending circles may charge a fee to join or online platforms may have a setup or monthly subscription fee. So consider the total cost before joining and be sure it fits within your budget.
• Monthly payments may be high: Depending on your financial situations, monthly payments may be too high for your budget, so look at your options and budget carefully before joining.
• Not the best option if you need cash immediately: You can’t just jump into a lending circle and start borrowing; you have to be a part of this community for a while before you can access that cash.^[8]

6. Salary advance

If you’ve exhausted other options, you can appeal to your employer to give you a salary advance. Your ability to get this depends on your relationship with your employer and any policies the company has.^[9]

Pros

• Paycheck ahead of time: Instead of putting up collateral or taking out a high-interest loan, you’re just getting your regular paycheck a little early.
• Quick cash: If the employer approves it, cash may make it to you very quickly — perhaps even the same day, depending on what line of work you’re in.

Cons

• Only consider for emergency use: Employers may look down on workers who frequently ask for salary advances, so try to use this only for true financial emergencies.
• Be open to negotiating repayment terms: Employers may also make demands of you as far as repayment, so you should be prepared for such a request.^[9]

Why you may want to open a bank account

As you can see, you have a lot of options for getting a loan if you don’t have a bank account, but they all have some significant drawbacks. You should consider getting a bank account instead, which opens up a world of possibilities financially.

• More loan options: When you have a bank account, you have more of an opportunity to apply with traditional lenders.
• Less expensive loan types: The loans they do offer you may also have lower interest rates, reduced or no fees, and more generous repayment options.
• Easier to get a loan: The process for getting a loan may be easier because lenders will see you as a safer bet.^[2]

Choose the best option for your needs

If you don’t have a bank account because you’re having trouble getting one due to your financial situation, look into second chance bank accounts. If you can’t find a bank willing to let you open a checking or savings account, a second chance bank account may provide a pathway to getting a standard checking account within six months to a year — all while providing many of the financial services of a regular bank account. If that’s not soon enough and you need money now, carefully consider which of the above options are right for you.

Sources

1. Experian. "What Can Be Used as Collateral for a Personal Loan?" https://www.experian.com/blogs/ask-experian/what-can-be-used-as-collateral-for-a-personal-loan/. Accessed June 6, 2022.
2. Experian. “Can You Get a Loan Without a Bank Account?” https://www.experian.com/blogs/ask-experian/can-you-get-loan-without-bank-account/. Accessed June 9, 2022.
3. U.S. News and World Report. "How to Lend Money to Family and Friends," https://money.usnews.com/money/personal-finance/family-finance/articles/how-to-lend-money-to-family. Accessed June 6, 2022.
4. Forbes. "Are Pawnshop Loans Worth It?" https://www.forbes.com/advisor/personal-loans/what-is-a-pawnshop-loan/. Accessed June 6, 2022.
5. Experian. “What Is a Pawnshop Loan?” https://www.experian.com/blogs/ask-experian/what-is-pawn-shop-loan/. Accessed June 13, 2022.
6. Forbes. "What Is A Title Loan & How Does It Work?" https://www.forbes.com/advisor/auto-loans/what-is-a-title-loan/. Accessed June 6, 2022.
7. Forbes. "What Is A Cash Advance And Should You Get One?" https://www.forbes.com/advisor/credit-cards/what-is-a-cash-advance-and-should-you-get-one/. Accessed June 6, 2022.
8. Experian. "What Is a Lending Circle?" https://www.experian.com/blogs/ask-experian/what-is-lending-circle/. Accessed June 6, 2022.
9. Indeed. "How to Ask for a Salary Advance (With Example)," https://www.indeed.com/career-advice/pay-salary/how-to-ask-for-a-salary-advance. Accessed June 6, 2022.

About the author

Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site www.AcetheJourney.com and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.

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